The States of Irreversibility in the Energy-Related Markets and their Identification
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Date
2024-05
Authors
Bielinskyi, Andrii
Бєлінський, Андрій Олександрович
Soloviov, Volodymyr
Соловйов, Володимир Миколайович
Matviichuk, Andrii
Матвійчук, Андрій Вікторович
Soloviova, Viktoriia
Soloviova, Viktoriia
Kmytiuk, Tetiana
Кмитюк, Тетяна Леонідівна
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Черкаський державний технологічний університет
Abstract
The energy sector plays a crucial role in a nation's economic development by addressing imbalances between production and consumption of energy resources. Numerous factors can influence the prices of oil, and fluctuations in one commodity can trigger short-term, medium-term, or long-term fluctuations in another. Interconnectedness among the commodities of the energy sector forms a highly complex, multi-parametric system characterized by simultaneously operating trends that are both contrary to previous dynamics and more predictable periods. Regimes of unpredictability exemplify the irreversibility of the studied system, and a loss of irreversibility may indicate destructive processes. Consequently, this study presents indicators-precursors of crisis events, characterized by a decrease in irreversibility as they occur. Using the example of daily West Texas Intermediate (WTI) spot prices (US$/BBL) from January 2, 1986 to March 18, 2024, we provide an indicator that precedes crisis states in the oil market. The construction of such an indicator is based on the algorithm of permutation patterns. This study demonstrates that the irreversibility of the system can serve as a precursor to financial crises.
This work is a part of the applied research “Monitoring, Forecasting, and Prevention of Crisis Phenomena in Complex Socio-Economic Systems”, which is funded by the Ministry of Education and Science of Ukraine (project No. 0122U001694). The authors would also like to thank the Armed Forces of Ukraine for providing security to perform this work. This work has become possible only because of the resilience and courage of the Ukrainian Army.
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Keywords
irreversibility, oil market, complex systems, indicator-precursor
Citation
The States of Irreversibility in the Energy-Related Markets and their Identification [Electronic resource] / Bielinskyi A., Soloviev V., Matviychuk A. [et al.] // Інформаційні технології в освіті, науці і техніці (ІТОНТ-2024) : тези доп. VІІ Міжнар. наук.-практ. Конф., Черкаси, 23–24 трав. 2024 р. / М-во освіти і науки України, Черкас. держ. технолог. ун-т [та ін.] ; [редкол.: Фауре Е. В. (голова) та ін.]. – Електрон. текст. дані. – Черкаси : ЧДТУ, 2024. – С. 201–203. – Назва з титул. екрану.